CRP Hosts Dark Money Panel

Update: We have now posted the video from the event. Watch it below, or on our YouTube Channel.

There will be no easy fix. Or at least that was the apparent consensus this morning at a Center for Responsive Politics panel discussion focusing on the rise of so-called “dark money” groups — the politically active nonprofits that spent hundreds of millions on the 2012 election but without disclosing their donors.

The panel, “Politically Active Nonprofits: What We’ve Learned about Dark Money” featured five panelists, including Donald Tobin, a law professor at the Ohio State University Moritz College of Law, who specializes in nonprofit tax law, and attorney Jan Baran, of Wiley Rein LLP, who has represented conservative organizations and the Republican Party in campaign finance cases dating back to 1976. Tobin and Baran agreed the current system has drastically been altered since initial efforts to regulate campaign finance in the 1970s, and the pace of change has quickened in recent years.

“We’ve come so far from where our default was, the rules have been abused so much and pushed so far,” Tobin said, dismissing concerns voiced mostly by conservative groups that the new rules would restrict their right to political expression. “What the IRS is coming forward with is a plan to stop abuse, not a plan to add restrictions.”

“These groups that are saying this is the end of free speech as we know it — they’re completely wrong,” he added.

But the rules will largely be ineffective in stopping secret money from coming into the political system, Tobin said.

“If (politically active nonprofits) are closed, I already have a long list of mechanisms or ways that groups will move forward,” he said. “For people who think this will be a gamechanger, I just don’t see it.”

The proposed rules will, he said, establish some specific sets of boundaries and will help frame the discussion, which is something that has been missing.

Baran blamed the creation of new rules in the late 1990s and early 2000s for recent upheavals, and said he feared that attempts by the IRS to create new rules for politically active nonprofits will only make things worse.

“Money migrates, and it migrates as a result of changes in the law,” Baran said. “Money migrated after the enactment of the McCain-Feingold law. I, and many others, predicted when the legislation was being considered that if you ban the soft money it’s going to go somewhere else.”

While politically active nonprofits might be problematic, Baran said, they may be preferable to wherever the money goes next if there’s a crackdown on 501(c)(4) groups.

“As a policy matter, is it a good idea to divert money that we know is going to be in the process anyway away from more accountable institutions?” Baran asked.

CRP’s Political Nonprofits Investigator Robert Maguire and Editorial and Communications Director Viveca Novak also were panelists, along with National Public Radio reporter Peter Overby, with whom they worked on an investigation into the Wellspring dark money network. Novak suggested that the real conversation may already have moved on.

“I kind of wonder if we’ve seen the heyday of the 501(c)(4) organization,” she said. “We don’t know what the strategists will come up with, but we know there is a huge pool of money that’s available to be used in politics as long as the donors’ names aren’t disclosed. Money in politics doesn’t ever really go away, it just shows up in new form.”

Maguire and Overby discussed the joint NPR-OpenSecrets.org project, and their ongoing work tracking the often complicated networks of politically active nonprofits that have been set up. Overby said what intrigued him about the Wellspring story was the data CRP had collected which showed the complicated relationships between numerous organizations in the network and the transfer of funds.

“Until CRP made this database, there was always a sense that money was moving around in the C4 universe, but we didn’t really have a handle on the extent of it,” Overby said.

According to Baran, there isn’t necessarily an urgent need to revise the “C4 universe.” The efforts to reform the rules are less about making things clear than they are about restricting the activity, he said. That’s why recent efforts to make legislative changes to the rules have failed, Baran said, pointing to the DISCLOSE Act.

“The goal was not so much disclosure but the repression of this type of activity, and in doing so, they basically split any possible coalition needed to pass the legislation,” Baran said. “So, what we’ve seen is a variety of attempts to get other avenues of accomplishing this goal through independent agencies. Not just the IRS and the FEC, but the SEC and the FCC.”

Tobin also expressed concern that these agencies that are now being looked at as possible regulators, including the IRS, aren’t “in the business” of regulating political campaign spending.

“Most people who look at this would love for the IRS not to be involved. The IRS would love to not be involved,” he said. “It’s not an agency well-designed to be involved with this. It distracts from the core mission, and it has lost credibility on its core mission.”

This morning’s event was held at George Washington University’s Burn’s Law Library and was introduced by GWU law professor Spencer Overton. A video of the discussion will be posted on the OpenSecrets.org’s YouTube Channel on Monday.

Russ joined the Center in March 2012 as the money-in-politics reporter. His duties include reporting for OpenSecrets Blog and assisting with press inquiries. Russ has a background in investigative journalism, having worked as a reporter for the Investigative Reporting Workshop at American University, and he spent five years as a newspaper reporter in New Hampshire. He has a degree in political science from Muhlenberg College and a M.A. in journalism and public affairs from American University.

Media Contact

Viveca Novak
(202) 354-0111
press@crp.org

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